Wilkinson v Secretary of State for Work and Pensions

Where a pensioner receives both a state additional pension and a guaranteed minimum pension, section 46(1) of the Pension Schemes Act 1993 requires the guaranteed minimum pension to be deducted from the whole additional pension attributable to tax years ending before 6 April 1997. The deduction is not confined to additional pension earned during contracted-out employment.

A court may correct statutory wording only in a plain case of drafting error. It must be abundantly sure of the provision’s intended purpose, Parliament’s inadvertent failure to give effect to that purpose, and the substance of the correction Parliament would have enacted. Perceived anomaly or unfairness does not meet that demanding standard.

The appellant received an occupational pension containing a guaranteed minimum pension arising from contracted-out employment. When calculating his state retirement pension, the Secretary of State deducted that guaranteed minimum pension from his entire pre-April 1997 additional pension.

The Upper Tribunal dismissed his appeal in [2008] UKUT 33 (AAC). It accepted that section 46(1) of the Pension Schemes Act 1993 literally required the deduction but considered that its operation might be anomalous. Permission to appeal was granted so that the Court of Appeal could determine whether the statutory language contained a correctable drafting error.

The central issue was whether the deduction should be confined to additional pension attributable to periods of contracted-out employment.

1. The appeal was dismissed unanimously. Section 46(1) of the Pension Schemes Act 1993 required the guaranteed minimum pension to be set off against the whole pre-April 1997 additional pension. It was not confined to the additional pension attributable to contracted-out employment.

2. The opening reference to “any period” concerned the period during which the additional pension and guaranteed minimum pension were both payable. It did not refer to the period of employment during which contributions were made. The statutory reduction was calculated by comparing the guaranteed minimum pension with the additional pension as a whole, subject to the limit applicable to pension attributable to tax years ending before 6 April 1997.

3. The computation of pension entitlement was distinct from the amount payable. Sections 44 and 45 of the Social Security Contributions and Benefits Act 1992 could produce an additional pension based partly on earnings during contracted-out employment. Section 46(1) then reduced the pension otherwise payable by reference to the guaranteed minimum pension.

4. The jurisdiction recognised in Inco Europe v First Choice Distribution [2000] 1 WLR 586 permits courts to correct statutory wording only in plain cases of drafting error. The court must be abundantly sure of the provision’s intended purpose, the inadvertent failure of the draftsman and Parliament to give effect to that purpose, and the substance of the provision Parliament would otherwise have enacted.

5. The pre-legislative and historical materials disclosed no drafting mistake. The explanatory note to section 29 of the Social Security Pensions Act 1975 contemplated deduction of the guaranteed minimum pension from the additional component generally and protected only the basic pension. Later material concerning the pre-April 1997 restriction was consistent with that interpretation.

6. The fact that the scheme could, in a limited class of cases, reduce additional pension earned during contracted-in employment did not justify rewriting the provision. There was no basis for concluding that Parliament intended a different result. Lady Justice Smith and Lord Justice Longmore agreed with Lord Justice Patten.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously. The court affirmed the Upper Tribunal’s construction of section 46(1) of the Pension Schemes Act 1993.

2. Upper Tribunal: In [2008] UKUT 33 (AAC), Judge Rowland dismissed the appeal against the Secretary of State’s revised pension decision. Although he identified a possible anomaly, he was not abundantly sure that Parliament had made a drafting mistake.

3. Secretary of State: The appellant’s state retirement pension was revised to £122.62 per week after deducting his guaranteed minimum pension of £40.66 from his pre-April 1997 additional pension.